Business Context and Reporting Period
Company: Newmark Group, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: October 25, 2018
Reporting Period: Quarter ended September 30, 2018
This filing announces the Company's financial results for the third quarter of 2018. The report incorporates by reference a press release (Exhibit 99.1) containing the detailed results. The filing focuses heavily on the definition and calculation methodology of non-GAAP financial measures used by management to evaluate performance.
Key Financial Metrics
Revenue, Profit, Cash Flow, Margins, Debt, and Liquidity: The provided text does not contain specific numerical values for revenue, net income, cash flow, margins, debt levels, or liquidity figures. The document serves as a disclosure of the methodology for non-GAAP metrics rather than a presentation of the raw financial data itself.
Non-GAAP Measures Defined:
- Pre-Tax Adjusted Earnings: Defined as GAAP income from operations before taxes and noncontrolling interests, excluding unrealized mark-to-market gains/losses on Nasdaq Forwards, non-cash asset impairments, allocations to limited partnership units, amortization of intangibles, and non-cash charges related to grants of exchangeability.
- Post-Tax Adjusted Earnings: Pre-tax Adjusted Earnings reduced by a non-GAAP tax provision calculated using an annualized estimate of the effective tax rate.
- Adjusted EBITDA: Net income adjusted for taxes, noncontrolling interest, interest expense, depreciation, amortization, and various non-cash charges including equity-based compensation and mortgage servicing rights (MSRs) amortization.
- Liquidity: Defined as cash and cash equivalents plus unfinanced marketable securities, reverse repurchase agreements, and securities owned, less securities loaned and repurchase agreements.
Material Changes and Comparisons
The filing text does not provide specific comparative data or percentage changes versus the prior comparable period. It notes that the press release attached as Exhibit 99.1 contains the results, but the text of the 8-K itself does not quantify the material changes in financial performance.
Guidance, Outlook, and Management Commentary
Guidance Policy: Management anticipates providing forward-looking guidance for GAAP revenues and certain Adjusted Earnings measures. However, the Company explicitly states it does not anticipate providing an outlook for GAAP results other than revenue. Management cites the difficulty in forecasting specific GAAP items with precision, such as allocations to limited partnership units, mark-to-market movements on marketable securities, non-cash asset impairments, and litigation resolutions.
Management Commentary on Metrics:
- Management uses Adjusted Earnings to evaluate operating performance and determine dividends/distributions, believing it better reflects ordinary operating results by excluding non-cash and non-recurring items.
- Adjusted EBITDA is used to evaluate operating performance by eliminating the effects of financing, taxes, and capital spending accounting effects.
- The Company emphasizes that non-GAAP measures should not be considered in isolation or as alternatives to GAAP net income.
Risks and Contingencies: The filing includes a standard disclaimer regarding forward-looking statements, noting that actual results may differ due to risks and uncertainties. It references risk factors in other SEC filings (10-K, 10-Q, 8-K) for a detailed discussion.
Investor Verification Checklist
- Review Exhibit 99.1 (the press release) for the actual numerical values of revenue, Adjusted Earnings, and Adjusted EBITDA for the quarter ended September 30, 2018.
- Verify the reconciliation tables between GAAP Net Income and the non-GAAP measures (Adjusted Earnings and Adjusted EBITDA) to understand the magnitude of excluded items.
- Confirm the specific impact of "grants of exchangeability" to limited partnership units, as this is identified as a significant factor affecting the non-GAAP tax provision and earnings calculations.
- Check the Company's latest filings for updates on the "Nasdaq Forwards" and their mark-to-market impact on "other income (loss)."
- Review the "Liquidity" definition provided to ensure it aligns with the Company's actual cash position and short-term availability as reported in the financial statements.